Technology: In search of lower Federal Circuit reversal rates

The Court of Appeals for the Federal Circuit is by far the most important and closely-watched circuit court for tech companies, because it is the appeals court for all patent infringement litigations. Although the Supreme Court has taken appeals from the Federal Circuit with increased frequency, it is the Federal Circuit that is, day-in and day-out, refining the patent laws on patentable subject matter, infringement, damages and so forth. As demonstrated by Apple’s recent suit against Samsung, patent infringement awards can exceed $1 billion. An injunction can cripple a company’s sales and customer relations. However, reversals by the Federal Circuit have cost Lucent a $350 million verdict against Microsoft and cost Centocor a $1.6 billion award against Abbott Labs. Therefore, a consistent, reliable Federal Circuit is necessary to help the district courts run their patent infringement litigations, to assist companies with their patent infringement analyses and to limit these huge reversals of fortunes.

With much of our manufacturing transferred overseas, patents are more important than ever to protect our innovations from low-cost copiers. They fulfill the Constitutional mandate to protect the only “right” actually listed in the Constitution, prior to the Bill of Rights:

to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Thus, the one right patent owners have is the right to exclude others from practicing their invention. To enforce their right to exclude, patent owners must sue an infringer in Federal District Court, which applies Federal Circuit law to all the patent-related issues. Thus, clear, consistent Federal Circuit guidance is critical for a patent owner’s enjoyment of that right.

The metes and bounds of a patent’s exclusivity is the precise invention recited in a patent’s “claims.” A patent contains a written description of how to make and use an invention. The patent’s claims are the numbered descriptive paragraphs appearing at the end of the written description. In many patent infringement cases, interpreting disputed terms in the patent’s claims (e.g., whether a “connection” includes or excludes a “wireless connection”) is a dispositive issue, because the interpretation of the claims typically determines whether they are infringed and/or whether they are valid. To borrow a phrase from Judge Giles S. Rich, one of the principal contributors to the 1952 Patent Act and an original Federal Circuit judges, “the name of the game is the claim.”

As a result of the Supreme Court’s decision in Markman v. Westview. (1996)—which held that judges, not juries, should interpret claims as a matter of law—claim interpretation disputes are frequently resolved in so-called Markman hearings before the case goes to trial. If the case is appealed, the Federal Circuit reviews the district court’s claim interpretations de novo, without deference.

Unfortunately, despite its importance, claim interpretation is often unpredictable. By various measures, the Federal Circuit reverses district court claim interpretations at a very high rate, suggesting to some that the “claim game” has become a game of chance. Indeed, the situation prompted Judge Patti B. Saris of the District Court for the District of Massachusetts to quip that if “the reversal rate is as high as some claim, the easiest thing to do is figure out what your decision is and then write the opposite.”

Professors R. Polk Wagner and Lee Petherbridge contend that one reason for the high reversal rate is methodological inconsistencies among Federal Circuit judges. For example, they assert that some Federal Circuit judges apply a “procedural” approach to claim interpretation, while others apply a “holistic” approach. Under the procedural approach, the written description of the invention is considered exemplary, and the claims are interpreted with respect to their ordinary meaning to those in the patent’s field, absent an unambiguous disclaimer of claim scope. Under the holistic approach, patent claims are interpreted “via an all-encompassing, open-ended reading of the claim language, patent disclosure, prosecution history, relevant dictionaries, and on-point expert testimony.” Some judges who employ the holistic method scour the written description for words of limitation. They contend that an inventor should not be entitled to patent coverage beyond the limits of the written description.

An opportunity to bring greater uniformity to future Federal Circuit claim interpretation law is now before the Supreme Court in Retractable Technologies, Inc. v. Becton, Dickinson & Co. The Federal Circuit had split over the proper interpretation of whether the claim term “syringe body” comprised or excluded two-piece bodies. The first question presented in the petition for certiorari is

[w]hether a court may depart from the plain and ordinary meaning of a term in a patent claim based on language in the patent specification, where the patentee has neither expressly disavowed the plain meaning of the claim term nor expressly defined the term in a way that differs from its plain meaning.

For better or worse, the Supreme Court’s decision in Retractable Technologies, Inc. may bring greater consistency to Federal Circuit claim interpretation methodologies, provide district court judges with more consistent guidance, and help lower reversal rates in an area of the utmost importance to technology companies and other businesses for whom patent portfolios have critical value and importance.